Emerging mkts slow down: HSBC

8220;In the second quarter of 2010,the HSBC EMI dropped to 55.8,down from 57.4 in the first quarter of the year,8221; HSBC said,adding,8221;However,it remains significantly higher than in Q4 2008 when the index hit a trough of 43.4.8221;

It said that while growth in both output and new orders weakened in China and Brazil,it gathered pace in India and Russia.

The HSBC EMI showed that although output remained above the long-term average,it was below than the one before the financial crisis,reflecting a moderation in growth rate of new orders,especially for manufacturing exports.

HSBC8217;s Chief Economist Stephen King said,8221;Export gain for companies in the emerging world have failed to sustain the momentum seen in earlier quarters. The stellar recovery in economic activity across most of the emerging markets seen since the first half of 2009 finally hit a bump in the road.8221;

But,he added that emerging markets,having escaped the legacy of excessive debts,may not face the same kind of financial constraints that will keep the lid on economic activity in the developed world in the years ahead.

HSBC said the services sector expanded at a faster rate than manufacturing for the first time since the onset of the financial crisis in 2008,suggesting that growth has become better balanced.

It also indicated that domestic demand in the emerging world is holding up well despite faltering manufacturing performance,HSBC added.

The EMI showed that headcounts rose at a faster rate in services than manufacturing,the former seeing the sharpest rise in payrolls for two-and-a-half years.

Regionally,employment increased at slower rates in China and Brazil but improved in India and,particularly,in Russia.